As language models mature, Microsoft CEO Satya Nadella sees them becoming commodities. The shift marks a shift in how companies approach AI development, with systems integration and product development taking center stage.
In a recent podcast, Microsoft CEO Satya Nadella said that he believes that "the models are getting commoditized" and pointed out that "OpenAI is not a model company, it's a product company that happens to have fantastic models at this point."
Nadella emphasizes that "models by themselves are not sufficient, but having a full system stack and great successful products, those are the two places" where companies need to focus now.
Nadella describes "just a tsunami of activity" across the industry since ChatGPT's debut in November 2022, spanning "chips, data centers, frameworks, foundation models, vertical AI companies, consumer hardware, consumer software, agentic software, modern enterprise software."
Microsoft is contributing to this trend. As Nadella notes, "we built Phi, you know" and now "Mustafa [Suleyman] and team" are developing new capabilities within Microsoft, likely Microsoft's first large model release with MAI, also including reasoning models.
Building complete AI stacks
Recent developments seem to support Nadella's view. Deepseek just showed it could match some of OpenAI's capabilities using far fewer resources. Meanwhile, OpenAI's go-to-market manager Adam Goldberg recently explained that success now depends on bringing together infrastructure, data, models, fine-tuning, applications, and user experience.
Put simply, OpenAI plans to expand across the entire AI value chain with products like ChatGPT. With agent-based products like Operator on the horizon, which are supposed to take actions instead of just generating text, controlling the full technology stack becomes essential - after all, autonomous AI agents represent the ultimate promise of an all-in-one solution that can handle complex tasks from start to finish.
The story of Figure AI adds another piece to this puzzle. The robotics company recently split from OpenAI to develop its own open-source models. While they cited the standardization of AI models as one reason, strategy likely played a key role - with OpenAI getting back into robotics, Figure AI needed to avoid becoming dependent on OpenAI's technology.
